Brokers beware: BMO loading up on mortgage specialists and originations

Brokers beware: BMO loading up on mortgage specialists and originations

TD Bank has done what many in this slowing market have failed to: grow its mortgage business by eight per cent in the second quarter. Still, it’s not alone.


Perhaps to the chagrin of brokers, BMO, which doesn’t use the channel, also reported significant growth in its mortgage portfolio for the three months ending April 31. The value of its residential mortgages rose to $65.5 billion for the quarter, up from the $63.6 billion it declared for Q2 2010. The growth came as the bank added 1,000 workers to its frontline staff – a significant number of them mortgage specialists.


“One of the myths at the moment is that volume growth has gone away, and that is just not true,” TD Bank Chief Financial Officer Colleen Johnston told reporters, after releasing Q2 results. “We had eight per cent growth in lending in Canada. Business growth was about 11 per cent, and in real estate-secured lending, which consists of residential mortgages and our home equity lines of credit that business was up eight per cent.”


The bank isn’t providing details on what percentage of that growth came way of the broker channel. Of course, none of BMO’s increase came via brokers. RBC, another bank working entirely outside the broker network posted a 6 per cent gain in residential mortgage volumes for the quarter, compared to the year-ago period. But other banks releasing their Q2 results this week were more reluctant to share details about their mortgage divisions as competition for a shrinking number of originations, year over year, grows. They’re also grappling with tighter profit margins as the Central Bank holds its rock-bottom overnight rate steady.


CIBC and National Bank – banks using the broker channel –– also reported higher second-quarter net incomes this week. While CIBC's earnings climbed three per cent to $678 million, they fell short of analysts’ predictions. National Bank actually exceeded expectations, declaring Q2 profit at $295 million, compared with $261 million a year ago.


But the increase in human resources at BMO speaks to the challenge facing brokers as they attempt to grow market share, even as new purchases in Ontario, Alberta, Eastern Canada and, even, British Columbia cool. The return to a more-stable housing market has been sped up by the federal government’s decision to tighten mortgage rules around amortization and refinancing. The BMO increases may have been helped by the rush of activity the banks and brokers themselves experienced in the months leading up those changes.